Spain’s Inditex Group, an owner of Zara and the largest seller of fashion apparel on the global market, has reported 2022 earnings. The company posted record profits in the year when the board of the business first passed to the daughter of the group’s founder Marta Ortega Perez.
Inditex Group’s revenue for the past year added 18% to €32.6 billion, up 15% from 2019 before the pandemic. The fashion giant’s profits rose 27% to €4.1 billion. In the fourth quarter, revenue rose 13% to €9.5 billion and profits rose 37% to €1 billion.
The day before, Swedish H&M, Inditex’s main competitor, also reported its operating results for the fiscal year 2022. As in previous years, the retailer’s revenue grew more slowly. H&M’s sales rose 12% to $5.3 billion. The retailer’s stock is down more than 8% on the latest news.
H&M has consistently underperformed Inditex, losing customers. The company faces a 68% drop in net income in 2022, and its revenue is still 4% behind 2019. The company is currently undergoing restructuring. Already 1,500 employees have been made redundant.
Inditex and H&M continue to benefit from the lifting of restrictions around the world. But their operating performance continues to be pressured by rising commodity prices and declining purchasing activity due to high inflation worldwide. H&M also feels competition from Shein, which sells cheaper clothing in the same price segment.
“Inditex is better able to withstand price increases because its customers are less price sensitive, while H&M is in more direct competition with cheaper players such as Shein,” commented Barclays retail sector analyst Nicholas Champ.
